Question

Addy Company has two products: A and B. The annual production
and sales of Product A is 1,700 units and of Product B is 1,100
units. The company has traditionally used direct labor-hours as the
basis for applying all manufacturing overhead to products. Product
A requires 0.3 direct labor-hours per unit and Product B requires
0.6 direct labor-hours per unit. The total estimated overhead for
next period is $98,785.
The company is considering switching to an activity-based costing
system for the purpose of computing unit product costs for external
reports. The new activity-based costing system would have three
overhead activity cost pools--Activity 1, Activity 2, and General
Factory--with estimated overhead costs and expected activity as
follows:

(Note: The General Factory activity cost pool's costs are allocated
on the basis of direct labor-hours.)

The predetermined overhead rate under the traditional costing
system is closest to: